With the economic struggles plaguing the world, government departments are investigating potential financial impropriety. Cash Store Financial (running InstaLoans and Cash Store) has been cited for a number of violations by Consumer Protection BC involving payday loans in British Columbia. These include violations of usury laws and forced purchases of credit cards.

Usury Laws

Consumers must be careful to calculate the annual interest rate percentage they are being charged on payday loans. These can be very high and violate usury laws. It becomes very difficult to repay a loan that doesn’t fit the consumer’s budget.The Consumer Protection Branch of the Ministry of Consumer Affairs seeks to protect consumers against “predatory lenders.” Many charges and fees are added that can make a loan “overbearing.” The Canadian government had several problems with Cash Store Financial forcing customers to buy a card to get a loan.

Cash Store Violations

In 2006, the Alberta Venture Magazine ranked Cash Store Financial as one of the province’s fastest growing companies. Cash Store Financial operates payday loan stores in Canada and the United Kingdom. By October of 2011, the four Canadian provinces of BC, Ontario, Saskatchewanand Alberta had brought suits against Cash Store Financial for violation of applicable lending laws. Here are the primary charges:

• Customer had to have cash card to borrow
• Charged customers for cash cards
• Collected more than 23% of amount borrowed exceeded maximum

When a customer needs cash, he needs the actual money in his hands. Cash Store Financial forced consumers to buy a card, then charged them for the card. This led to amounts exceeding the statutory limit of 23% for interest. These high interest payments and extra charges violated the law. The regulatory agencies deemed Cash Store Financial’s cash card requirement as an attempt to evade usury laws.The government has fined Cash Store Financial for 45,000 Canadian dollars. It has directed consumers to join a class action suit for reimbursement of millions of Canadian dollars. The government is threatening to revoke the payday license of Cash Store Financial.

Cash Store Financial Denies Charges

Cash Store Financial denies the charges arguing that a third-party issued the cards. Cash Store Financial is based in Edmonton, Canada. The Cash Store is appealing the decision and issuing a new line of credit financial instruments. Cash Store believes these new products do not violate applicable laws.